Hi there, you are welcome to another article that takes you a step closer to becoming a successful real estate investor.
In this article, we seek to explain the key difference between income and cash flow and why you should focus more on increasing your cash flow than your income if you want to become a successful real estate investor.
For starters, income is the money received on a regular basis from work, it could also refer to the cash received by an individual or organization in return for their services or goods. It could indicate money in.
Differences between cash flow and income
Cash flow on the other hand refers to the inward flow of money into a business in terms of income that comes consistently and passively.
For example, you earn $200 a month as an accountant working in a bank, that’s an active income
But on the other hand, you have $50 flowing in from a rental apartment you put your money down on that doesn’t require your time or effort. This is called cash flow.
Why should you focus on increasing your cash flow?
If you want to build wealth, you shouldn’t focus so much on increasing your income because that would mean you have to work harder or longer,
But instead focus on increasing your cash flow, that way you can make much more money without having to work at all.
And the best way to increase your cash flow is by channeling a good amount of your income into getting an asset,
Because what a cash-producing asset does for you is that it opens up a consistent income stream for you that is all passive.
You must have heard the saying, “the rich get richer and the poor get poorer.”
Most people don’t understand why and how it works.
It is not merely because the rich are rich; but because they use money differently than the majority.
The rich don’t work for money to spend it on liabilities, instead, they invest it in assets that will make more money, and as a result, their wealth multiplies.
The poor and the middle class, on the other hand, work for a limited income which they spend on liabilities like mortgages, loans, cars, and credit cards.
They often avoid investing because “it is too risky.” But, you must agree, it is riskier not to invest.
According to Robert Kiyosaki in his book, “the cashflow quadrant.” He designed a table, which is divided into four areas.
E and S quadrants are on the left side, and the B and I quadrants are on the right side.
You can be in all quadrants, but most people are not.
The goal is to progress through the arrows and become more on the right side of the table.
There are three fundamental wealth builders that investors look for; cashflow which is the income that assets provide to the investor, an appreciation which is the value and growth that an asset has over time providing leverage, and taxes which has a lot of tax benefits for the investor where investors can grow their wealth to high levels virtually tax-free.
If you are looking to open up a source of passive income or increase your cash flow, Cuddle is designed just to help you do that,
You can get started owning a profitable piece of real estate that produces cash flow for you with as little as N20,000.